Message on the
Management of the
In
July 1980, I promised the American people, ``I will not accept the excuse that
the Federal Government has grown . . . beyond the control of any President,
Administration or Congress. . . . We are going to put an end to the notion that
the American taxpayers exist to fund the Federal Government. The Federal
Government exists to serve the American people . . . I pledge my Administration
will do that.''
We
have delivered on that promise, and I take great pride in transmitting to the
Congress, my fifth and final Management of the United States Government Report.
1980
-- A Government Out Of Control
When
we took office in 1981, Federal outlays were increasing almost 17 percent a
year -- an unsustainable rate. There was no organized approach toward reducing
waste, fraud, and mismanagement; no Governmentwide
management systems; no cash and credit management systems; and there were
nearly 400 incompatible accounting systems.
In
1981 the annual cash flow of the Government was approaching $1.3 trillion with
no system to manage it. Hundreds of millions of dollars in interest payments
were being lost simply because the Federal Government could not get its
financial house in order.
Federal
agencies were giving tax refunds, loans, contracts, grants and jobs to people
who had defaulted on their Federal loans or otherwise defrauded the Government.
Almost
400 separate and distinct financial management systems were in place and unable
to communicate with one another or keep up with the impact of our expanding
Government.
There
was great concern about the quality of service provided to the public, but the sporadic
and infrequent efforts to improve productivity were misguided and unsuccessful.
The
purchase of huge computer systems was done without adequate strategic planning.
Government
performed tasks that could and should have been done by the private sector.
In
1981, the Federal Government was incapable of adequately determining whether
funds were being spent for the intended purpose.
This
mismanagement, combined with increased regulation of the private sector and
State and local governments, meant that Federal inefficiency was being exported
to the rest of the economy.
Eight
Years Of Accomplishments
Early
in 1981, we initiated a Governmentwide strategy to
correct the management problems we faced.
Waste, Fraud, and Abuse. At the outset of our
Administration, I formed the President's Council on Integrity and Efficiency
(PCIE) to utilize fully the capabilities of the Government's Inspectors General
to reduce waste, fraud, and mismanagement. The PCIE consists of the Inspectors
General of the major departments, the Federal Bureau of Investigation, and the
Office of Personnel Management. Since its formation, the PCIE has saved, or put
to better use, funds totalling over $125 billion --
and continues to do so at a rate of over $20 billion a year. Our war against
fraud and waste has also produced 27,000 successful prosecutions.
Cash Management. The Federal Government
now recognizes that cash is an asset and that there are major cost benefits to
be achieved by managing cash intelligently. The application
of business-like practices to manage the Government's annual cash flow have
saved $4.3 billion since 1983. In FY 1988 alone, the Government realized
interest savings of almost $1 billion. And, Federal agencies now pay 87 percent
of their bills on time -- making us not only a desirable, responsible business
partner, but also saving the Government millions of dollars in interest
payments and late payment penalties each year.
Also,
the Federal Government now uses modern, private sector business technology to
manage its accounts, including electronic fund transfers and direct deposit.
These electronic links enable 450 financial institutions around the country to
wire funds to the U.S. Treasury within one business day. Further, 234 lockboxes
operated by financial institutions have reduced from one month to three days
the time required by agencies to receive and process payments.
The
Government now accepts credit cards. Examples of Government credit card
acceptance include: duties and seized property sales, medical services,
Government publications, passports, and recreational facilities fees.
Credit Management. We put into place
routine private sector practices to better manage the Government's credit
portfolio. Applicants for Federal loans, contracts, grants, and jobs are now
prescreened for their creditworthiness.
Loan
asset sales allow the transfer of loan management responsibilities, and risks,
to the private sector. In 1987, the loan asset sales pilot program at the
Departments of Agriculture and Education yielded $3.1 billion in third-party
sales. In 1988, proceeds from sales and prepayments were $8.2 billion.
In
addition, the Federal Government is now engaged in aggressive efforts to
collect money owed it. These efforts include the use of private sector
collection firms, offsetting tax refunds due delinquent debtors, offsetting the
salaries of Federal employees who owe the Government,
and Justice Department litigation and contracting with private attorneys for debt
collection. Since 1982, an additional $3.7 billion owed the Government has been
collected through these initiatives.
Financial Management. The Government is now
building an effective system for managing the Government's over $2 trillion
cash flow, processing more than 900 million payments, and paying its 5 million
civilian and military personnel. For the first time, Governmentwide
standards and systems have been established to provide consistency in financial
and payroll reporting among all Federal agencies.
To
assure consistency and adherence to sound financial management principles
throughout the Government, a Chief Financial Officer (CFO) has been designated
within the Office of Management and Budget, and CFOs for each agency are now in
place.
Quality and Productivity Improvement. As in the best-managed
American companies, a major push is underway to instill a ``Total Quality
Management'' environment in the Federal Government workplace. The goal of this
program is to provide error-free, timely, and inexpensive services and products
to the public. This commitment requires a fundamental change in attitudes and
ways of doing business. One example of results that have been achieved is a
reduction in the amount of time it takes to process a HUD property improvement
loan, down from 86 days in 1985 to just 22 days in 1988.
Information Technology. Efficient use of
computers, information technology, and management information systems are benefitting numerous programs that touch the lives of many
Americans, including modernization of the social security system; redesign of
the income tax system; improved weather forecasting; and safer air travel.
Agencies
are now emphasizing better use of technology to deliver services and improve
quality and timeliness. For example, in 1988, 2 million tax returns were filed electronically, reducing processing time and providing
refunds in less than 3 weeks; and 12 of 20 air traffic control centers have
been modernized, increasing reliability twentyfold.
Privatization. The Federal Government
cannot compete efficiently with the private sector in providing most services
or producing commercial goods. For that reason, we have come to rely on the A -
76 program, ``Performance of Commercial activities,'' which permits agencies to
decide whether or not the Government should produce a service in-house or buy
it from the private sector. The Government's performance of commercial
activities under this program is becoming part of every Federal agency's
operations and saved the Government over $830 million in 1988 alone. And, we
have increased the number of Government contracts awarded competitively from 44
percent in 1982 to almost 60 percent in 1988.
Planning
For The Future -- The Year 2000
Management
inefficiencies can be caused as a result of poor planning, bad process, or lack
of commitment. We have improved the latter two substantially, and have
included, for the first time, a 10-year plan -- to the year 2000 -- for
continuing to pattern the Federal Government services to the needs of the
future.
In
my 1990 budget, I have requested that $84 million, over and above that included
in individual agency budget requests, be appropriated to the President for
distribution to agencies to complete Reform '88 management initiatives. These
funds will greatly enhance the capabilities of agency financial and accounting
systems, and help introduce better quality in the services and products
provided to the American public by its Government.
It
is to the collective credit of Federal managers and employees that the Federal
Government has made remarkable achievements in managing and streamlining its
operations over the past eight years. The Federal Government rarely has the
opportunity to take pride in its many accomplishments. This report allows the
record to speak for itself. Our management improvement program, Reform '88, has
achieved measurable results, saving billions of dollars for the American
taxpayer and providing better, more efficient services to every American.
Ronald
Reagan